Q&A: Aparup Sengupta, MD and global CEO of Aegis

BPO firm Aegis has been growing faster than the industry at a difficult time -  part of it is because the firm has not built an India-centric business. Aparup Sengupta, MD and global CEO of Aegis, explains the nuances of hiring more people outside India and what the government's role should be in promoting the industry.

It appears India as a BPO destination is in a bit of trouble with growing protectionism in the US. Also, Philippines has now become more attractive for voice work. Where is the Indian BPO industry heading?
We saw that in 2005. If BPO means taking Western jobs and bringing it to India, then it is not a very encouraging sign. Since 2005, we have said that we will be a company that is global in nature. Out of the 60,000 people, more than 50 per cent of our workforce are outside India and they are Indians. We have a workforce of 77 nationalities. Today, we have 7,000 people in the US. In each of the geographies that we operate, 97 per cent of the people are indigenous.

We don't call ourselves either BPO or IT; we call ourselves an "experience company" - we manage moments of truth, we enable moments of truth, we extend moments of truth and we enhance moments of truth. We said we would focus on experience; customer experience and consumer experience. That has been our strategic positioning. Managing experience is call centre work. Enabling is technology, process engineering and consulting. Extending experience is the back office work; enhancing experience is analytics and research.

We have built a $1 billion company with all this. It took us five years to build a $1 billion company. We should be able to grow ourselves to a $2 billion company in three years. We are talking of a CAGR north of 30 per cent - far higher than the industry average. Had I just hired in India, there would have been challenges; there are sentiment issues. You are grappling between economic upside versus the emotional baggage - the fact that you are taking jobs away.

Since you hire so many people onsite, how does your margins trend?
Sustainable margins for this kind of company will be about 15 per cent. But look at the growth - 43 per cent. I could have built an Indian business with 18-20 per cent margins. However, I would have been vulnerable on three counts - sentiments, all the rhetoric, and geopolitical risks like currency fluctuations. We have 70 per cent of the business naturally hedged.

How much of your growth is organic?
Between 2007 and 2011, our CAGR is 51 per cent. Half of it is organic - about 25 per cent. In March 2011, we stopped all acquisitions and we closed the year at $704 million. This year, we will close at $ 1 billion - that is 43 per cent growth.

How do you view the role of the Indian government in promoting the industry and what could it now do?
They believe that we are rich guys and we make a lot of money. So they will take all the benefits away - STPI and the tax advantages. This is a very short term vision. Other geographies will become more competitive and it would take away lot of jobs.

A case in point: Philippines has overtaken India in terms of some of the front-office work. Huge amount of government subsidy is given to companies in Philippines; they don't have to pay tax. About 50-60 per cent of the cost is people. This means you are creating jobs. They will all spend money and as a nation, you are anyway getting taxes in income and other sales tax because of consumption. Plus, you have 1:3 employment - there are three indirect employment generated for every one employee. That itself is a thesis to encourage the industry for some more time. This industry has grown in India despite the government's help. The government can now mellow down some of the rhetoric that is uncalled for. If we start acting protectionist, many companies will not do business here. If we don't buy aircraft as a nation, Seattle will be in problem.